Kmart
Introduction
Management is an integral part in any forms of organization as it involves crucial accumulation and assimilation of accepted ideas and views that will relate to the real scenarios within a particular desired context in an organized way. It is the main channel why people at work achieve a certain degree as well as level of trust and respect. Hence with, management is also an essential factor that narrates the applicable issues that would be relevant to a particular management process and development in lieu to the present day epoch of today’s world. In making specific development considerations are important in order to foresee changes in such organizational systems that manifest clearness of facts and the spontaneity of the applied discussions relating to management development.
Basically, there are many features of the market that must be taken into consideration in order to glance into the probable effects of these market features in the potential success or failure of an organization. A picture of this is the market situation. The meditation on the activities of the market atmosphere is considered a dictum by firms. The business press is satiated with stories of firms that are booming because they are supple in responding to the transformations that pummel them. Marketing researchers created the term “market orientation” to chuck more light on the nexus between a business and its environment, and their findings added observed evidence to the maxim mentioned above.
This paper shall be discussing the market of environment of Kmart by analyzing its background by examining of the external environment of the company using the SLEPT analysis. It will then be followed by a SWOT analysis of Kmart in order to uncover the strengths and weaknesses of the company. In addition to this business analysis, the existence of business attributes, specifically leadership, innovation and motivation, will be described and discussed using Kmart stores as the actual business case. Apparently, this research will also provide a synthesis part that discusses and illustrates the factors to be considered in making Kmart a successful retailing business. The researcher will consequently provide sound conclusion and pertinent recommendation based on the entire information presented in this paper.
Background of the Company
In 1899, opened a reticent five-and-dime store in downtown Detroit and altered the whole backdrop of retailing. Currently, the store that built has developed into a realm of more than 1,500 stores and an Internet presence that catches up the attentions of millions of customers (.). Significantly, the Kmart name has turn into an emblem of Americana, representing for quality products at low prices.
As opened his first store in 1899, the stumpy prices appealed to purchasers and permitted him to develop to 85 stores in 1912, with yearly sales of more than million. However, conflict and economic despairs hit America hard over the succeeding decades, but the stores of were always there to offer customers products at prices they could afford. In addition to this, Stores also offered people what other businesses at the time could not i.e. jobs to support their families (n.d.).
Through the years, prices may have altered, but the business philosophy remained the same which is to offer consumers products they need at prices they can afford and as a result consumers keep coming back.
Currently, Kmart Corporation, which is a discount retailer and a general merchandise retailer, was integrated in May 1916. The Company functions in the general merchandise retailing industry by means of 1,829 Kmart discount stores with locations in all 50 states, Puerto Rico, the United States Virgin Islands and Guam, as of January 29, 2003, and through its e-commerce shopping site, www.kmart.com. On January 22, 2002, Kmart and 37 of its United States businesses profiled deliberate requests for restructuring underneath Chapter 11 of the federal bankruptcy laws, and, consequently, acquired an exit financing facility. On January 28, 2003, the court permitted the shutting down of 326 stores situated in 40 states, which figure was afterwards condensed to 316 stores, or roughly 17%, of the Company’s 1,829 stores. In May 2003, the Company transpired from Chapter 11 protection (, 1998).
Basically, the Company’s general merchandise retail operations are positioned in 314 of the 331 metropolitan statistical areas (MSAs) in the United States. Kmart stores are commonly one-floor, detached units varying in mass from 40,000 to 194,000 square feet with a standard size of 98,000 square feet. In addition to its general merchandise retail operations, the Company operates 114 Kmart Supercenters. Its supercenters merge a full grocery, deli, bakery, video rental and uninterrupted accessibility. They also tender the general merchandise collection of a Kmart discount store (, 1998).
SLEPT and SWOT ANALYSIS
SLEPT ANALYSIS
Social Influences
- The September 11 attacks have affected the American consumer’s attitude on going to public places.
- There is a significant demand for retail merchandise in the United States.
- The merchandise sold in Kmart stores could be considered as basic commodities for the American public
Legal Influences
- Lawsuits has become the basic defense of a shopper or an employee when they are subjected to a certain level of discomfort on stores
- United States’ tort reform is considerably meek when dealing with corporate giants such as Kmart.
Economic Influences
- The September 11 attacks has also affected the sales of the company
- Competitors are closely breathing down Kmart’s neck
- Kmart is currently expanding its market by looking to other opportunities aside from the retail industry
Political Influences
- When Pres. Bush was still the governor of Texas, he have authored several legislation in favor of large businesses
- The Bush administration’s war on terrorism has affected the perception of the international market on American companies
- The congress has ensured the security of American companies by passing legislatures protecting them in order to provide more jobs for the American public.
Technological Influences
- Kmart has tapped the internet by installing a website for home shopping.
- A considerable number of internet home shopping companies has been established itself long before Kmart.
Actually, the organization’s market environment context is thus made up of all the conditions and factors external to the organization that can positively or negatively affect the life, orientations, structures, development and, in a word, the future of your organization. The research on an organization’s market orientation would also be helpful in the study. Research on market orientation has centered on understanding the construct and examining its relationship to performance. Two important studies sought to define and operationalize market orientation. Based on an extensive review of the literature on sustainable competitive advantage and marketing strategy, (1990) operationalized market orientation as consisting of three dimensions: customer orientation, competitor orientation, and inter-functional coordination. Using both a literature review and field interviews of managers, (1990) operationalized the market orientation construct as consisting of three basic components: intelligence generation, intelligence dissemination, and responsiveness. Intelligence generation extends beyond collecting information about customer needs and preferences to include information about the entire task environment confronting an organization. To be market-oriented, an organization has to communicate, disseminate, and often “sell” market intelligence to relevant departments and individuals in the organization. (, 1998). And finally, the market-oriented organization responds to or acts on the market intelligence gathered and disseminated.
Year after year, sales, profits, and shareholder returns from this massive group of discount stores increase, defying economic cycles and the woes that seem to beset other retailers from time to time. Some argue the reason is market power: Kmart built its business by opening stores mainly in small communities where there was less competition. Others point to its systems: electronic linkages with suppliers that keep the shelves well-stocked at minimal cost. Another explanation is highly motivated staff, inspired by the late Floyd Hall’s habit of driving around visiting stores, and supported by concepts like teamwork and delegation. Paying attention to customers is also mentioned: at Kmart customers really do come first. And of course leadership, the most intangible but perhaps most potent factor in management cannot be ignored. Kmart represents a combination of factors – a thousand infinitesimal actions and decisions – that together have led to its unusual success.
SWOT ANALYSIS
Strengths
Actually, Kmart’s strengths include competent top management and rank & file for operation and maintenance since their current CEO and their current restructuring plan contributes to the development of the company. Actually, has proven himself to be of grand worth to Kmart since he saved them from near bankruptcy in January 1996. negotiated with leaseholders, vendors and creditors not to force Kmart into bankruptcy in spite of the junk bond rating they had expected (, 1998).
Weaknesses
As indicated, the weaknesses of Kmart include their incapacity to contend with Wal-Mart on price, status, and inability to execute goals and strategy, and their corporate culture.
Opportunities
The opportunities for Kmart are their private-label merchandise, which has enhanced in both quality and value. Overseas Expansion is another prospect for all companies within the retail business. Even though Kmart has lately pulled out of various global markets and ventures, they are still vigorous in others. Also, when they are throughout reformation, Kmart will most likely have other chances for global prospects.
Threats
As illustrated, the threats in front of Kmart contain Wal-Mart’s viable pricing strategy. Wal-Mart is still undisputed since it also has strong supplier dealings that make them a throttlehold into lower prices.
Leadership, Innovation and Motivation in Kmart
Businesses operate through the aid of various factors such as leadership, innovation and motivation. Literature has documented how these attributes had been applied in business. As previous researches had illustrated how these attributes have benefited entrepreneurs, the interest on them has substantially increased. The following discussions show the value of these three attributes to various business operations and to initial development of Kmart.
Leadership
With the increasing business challenges, like cutthroat competition and economic changes, business leaders are considered as essential for development and success. In addition, the style and efficacy of leadership in a business makes it distinct from others. In a number of articles and literatures, leadership has been recognized as an important element in implementing strategies for business direction (1996;, 1996). This direction towards progress can be achieved by the business leaders’ potential to integrate innovation, creativity and determination within the operation.
Over time, the role of business leaders to business development has become more diversified. The traditional belief that business leaders should concentrate on employee motivation has long been transformed. At present, leadership as a business attribute should also serve as a competitive weapon (1995). In order to play this leadership role, leaders should have certain elements. These include a strong moral integrity, confidence in ones own beliefs and purpose, strong dedication to the business’ goals and vision, above average sense of creativity and innovation, powerful optimism and drive, dedication to the establishment of business competence, strong qualities of teamwork and persuasiveness as well as stability of emotional and intellectual aspects (1998; 1996;, 1994).
Aside from the importance of particular leadership skills, literature had also emphasized that businesses should apply leadership styles other than the command and control model. Specifically, businesses should employ the serve and support model into their operations as a mode of leadership. In this style of leadership, followers are provided with a substantial deal of psychological capital and latitude to progress at their own pace (, 1998). This type of business leadership enables the creation of a learning organization. In addition, it also promotes the cultural interest to bring out new ideas, application of new methods and development of modern approaches for business operation (1996).
In Kmart’s case, executive has changed as CEO of Kmart Holding Corp. selection creates him one of six African Americans who presently head a Fortune 500 corporation and one of eight who have ever apprehended the position (, 1998).
Nonetheless a number of analysts and observers have called it a surprising move, , chairman of Kmart’s board, who owns 52.6% of its stock, says the company has been dependable in its approach to pull itself out of bankruptcy and become stable its finances in an endeavor to revitalize and fortify the retail chain as a competitive brand.
Since rising from bankruptcy, Kmart’s stock performance has surpassed outlook. The company’s stock has mounted to a 52-week high of .48 from a low of .41. The company has posted increasing proceeds for fiscal 2005, earning .54 per share for its fiscal second quarter (1998). Day, a hard-line finance executive who productively maneuvered Kmart through Chapter 11, resigned less than 18 months after the company came out of bankruptcy. Currently, the company is financially very established. And evidently Kmart’s cash-flow is affirmative (, 1998).
and the Kmart board believe Lewis, 50, an executive with a strong reputation for brand expansion and team building, is their man. Thus, as a significant business attribute, leadership should not be focused on an individual’s gender or cultural origin, considering that the efficacy of ones leadership has nothing to do with both of these factors. Leaders in business should possess more significant potentials and skills that will facilitate the initial development of a business (, 1998).
Innovation
Innovation has been defined in various ways over the years. In the early times innovation has been recognized as the process in creating a new item and adopting it into the system (, 1973). Over time, the research on the value of innovation to business has been divided into different levels based on the organizational unit (e.g. regional, firm, project levels). Moreover, the manner how business organizations develop through innovation has also been subjected to research. One of these researches was conducted by (1997). In this study, the researcher defined the difference between sustaining from technological change. Specifically, noted the reason why successful innovators prefer sustaining technologies over disruptive technologies. The researcher stated that the main reason for this is that sustaining technologies enables the improvement of the performance of established products. Moreover, these involve performance dimensions that regular customers in primary markets have previously valued. On the other hand, disruptive technologies propose new value that few customers, usually new ones, patronize.
This perspective has been supported by the study of (2000). Investigating the innovation process at the firm level, the researchers concluded that the adaptation strategy or focusing on constant innovation is a better policy as compared to gradual or selective innovation.
Up to the present time, researchers have continuously devoted productive efforts in studying the application of innovation to business. Businesses have supported the findings of these researches as studies emphasize the role of innovation as a primary element of survival. Indeed, literatures have concluded that innovation is more than an investment but more of a requirement. Currently, innovation is also recognized as the attribute that allows organizations to enhance the quality of their performance and outputs. Innovation also enables businesses to create alternative applications for existing product lines as well as enter new markets. According to (1996), considering the increasing competition in the business world, in addition to growing markets and technologies, innovation is really not just a mere fad but a necessity.
Actually, in 1990, Kmart exposed a bold new logo and a bold new plan — a five-year, .5 billion new-store opening, enlargement and modernization program to focus the business back on what mattered most — its Kmart stores. Apparently, in 1991, as part of innovations, Kmart opened the first Kmart Supercenter in, , offering a full-service grocery along with general merchandise 24 hours a day, seven days a week (n.d.).
In 1996, an absolute revamp of the Kmart store was commenced, making them cleaner, brighter and easier to shop. A ”Pantry” department selling regularly procured consumable goods was enthused toward the front of the store and a new focus was positioned on the Children’s and Home Fashions departments. These ”big” changes were signified by a new name for the remodeled stores i.e. ”Big Kmart” (n.d.).
To spread out the reach of the company, in December of 1999 Kmart launched a new Internet presence, . By initially offering free Internet service, was able to list a record-breaking number of users in its first few months. Shoppers now know the e-commerce and information site as .
The role and significance of innovation in business have been substantiated by numerous organizational surveys. In the survey conducted by (1997) for instance, the chief executive officers of 669 firms worldwide had considered innovation through technological means as essential in developing competitive advantages. In 1993, conducted a survey using telecommunication companies within six European countries and found out that both innovation and strategic vision were essential to the efficacy of the junior and middle managers’ performance. Moreover, other similar researches also found out that innovativeness is among the top ten characteristics of successful businesses (., 2000).
Motivation
During the early times, employees were typically viewed as common inputs that help the company generate standard goods and services. Eventually, this initial perception has changed due to previous researches. One of these studies was the one done by , which concluded that money is not the only thing that motivates employees and that their behavior id directly related to their attitudes. These findings were discussed in detail by (1973). Aside from this research, the approach to human relations management was also pioneered by the , where the research concluded that the motivation and needs of the employees are considered among the main priorities of business and organizational managers (1993).
A number of contemporary authors have already defined the principle behind motivation. (1995) for example, have defined motivation as the psychological process, which gives behavior direction and purpose. Another definition defines motivation as the tendency to behave in an appropriate manner to attain certain needs (, 1995). (1994) also gave meaning to the concept of motivation by defining it as the internal drive to satisfy individual needs.
The introduction of several researches on employee motivation has also given birth to a number of theories explaining the factors that motivate employees. These theories include the reinforcement theory, equity theory, expectancy theory, the need-hierarchy theory and the two-factor theory. According to (1953), the reinforcement theory suggests the behaviors of the employees directly impact the outcome of their work or their performance. Thus, an employee with a positive behavior will bring about positive outcomes, whereas those with negative behaviors will lead to negative results. Thus, the positive behaviors of the employees should then be reinforced by their managers so as to generate more positive outcomes.
The equity theory on the other hand, implies that workers strive for equity amongst themselves. equity theory explains that equity is obtained when the employee outcomes is in proportion to the input (1965). Thus, this motivation theory implies that the efforts of the employees at work as well as their good performance should be rewarded appropriately by their managers. expectancy theory implies a similar concept. In this theory, (1964) indicated that the employees’ effort leads to performance and that this performance should be given due rewards and recognition. The nature of these rewards however can be good or bad. The managers should consider giving more positive rewards as these will make employees more motivated.
(1943) had identified five levels of employee needs, which include the physiological, social, ego, safety and self-actualizing needs. on the other hand (, 1959) had classified motivation into two factors. These two factors are motivators and hygiene. Intrinsic or motivator factors pertain to recognition, achievement and attainment of job satisfaction. Alternatively, extrinsic or hygiene factors refers to job security and payments.
Theory has indicated that motivation of employees used to be focused on the provision of financial benefits. In the case of Kmart, this conventional belief is still applied in motivating the employees. However, while this is evident, there have been significant changes done by the business. For instance, rather than just giving the employees due recognition and monetary rewards based on their performance, the employees are also treated as an important part of the business’ success.
Kmart was able to apply the theoretical perspective by combining both the new and conventional belief on motivation (n.d.). In addition to financial benefits, Kmart also reaches out to its employees and treat them importantly, which in turn serve as a form of motivation. With this example, Kmart was able to show that money is not the only form of motivation business owners can give to their employees. Similar to ’s theory, there are other needs that employees have to satisfy other than material possessions. They must also feel that they belong to the company and that their role is significant for the success of the business.
One of the important aspects that were observed from the case example is the importance of company values in motivation. Kmart for instance, finds significant meaning behind the concept of reciprocity. With this attitude, it is easy for the business to appreciate the efforts of its employees and provide the appropriate rewards.
Based from studies and researches, the need for motivation in the initial development of businesses is reliant on the purpose of survival. In the beginning stage of a business, employees should be provided with substantial motivation as they will be important keys for the business to survive. While this is a recognized fact, managers tend to find motivating employees complicated and difficult, particularly as employee behaviors and attitudes vary constantly (, 1991). In one study for example, the conclusion suggested that as the income of the employees increases, it becomes a less motivating factor. In addition, as employees grow older, interesting jobs become a primary motivating factor (1987).
Synthesis
There are a number of factors that should be considered in a business. Aside from the product, people and systems that should be incorporated into the operation, other attributes like leadership, innovation and motivation should also be present in the business. The main significance of these attributes is that it allows the entrepreneurs to incorporate new strategies and protocols that are applicable and beneficial to their respective businesses.
Like in any other field or industry, leaders are significant as they serve as the people’s guide and foundation. The potentials and skills of business leaders to integrate new and effective policies, to motivate his or her subordinates as well as to maintain the progressive growth of the business, are some of the features that make business leaders essential. In terms of decision-making, the business leaders are vital as well. They are aware of the entire processes involved in the business as well as the people in charge in its departments. As business leaders consider these factors in formulating important decisions, their knowledge and background of the entire operation is necessary.
In addition to effective leadership styles, innovation is also important in making a business successful. Innovation in businesses can come in various forms. It could either be innovation through information systems, customer relation practices or new corporate culture. The purpose of innovation in businesses is significant as this allows entrepreneurs to integrate new policies and systems that can benefit the employees, the management or the customers. Innovation brings several benefits to the business. For instance, innovation makes businesses more competent and updated. It helps the business to implement the latest business trends and obtain additional advantages. In general, innovations make most business operations run faster and more efficiently.
Motivation is yet another important aspect of businesses. This particular attribute applies primarily among the businesses’ employees. As the workforce of a business is one of its main foundations, motivating the employees to work harder and become more productive is significant for the business’ overall performance and output. Moreover, motivating the employees is one effective way of recognizing the employees’ inherent strengths and helping them with their weaknesses and work concerns.
These attributes are some of the important factors that should be in a business. An actual business case can probably help in determining the role of these attributes to the initial development of businesses as well as their importance in generating significant outcomes and products. Kmart is one of the notable businesses in the world not only for becoming a business retail giant but also for being recognized for its effective strategies and work practices that other new businesses and competitors have chosen to follow.
Conclusions
Kmart is one of top markets in retail industry in the United States for a considerable number of years already. The initial development of a business encounters a number of challenges that directly affects its stability and success. Thus, business attributes like leadership, innovation and motivation are significant so as to support its development. In the case of Kmart, the role of these attributes as indicated in theory and literature has been identified in the actual business operation.
Leadership in business for instance has been described in literature as the command and control system that gives all thinking and decision-making abilities to the leader, while the subordinate employees will just have to follow. In time, this leadership role has transformed into a more service and support oriented mode. Through Kmart’s organizational structure, work responsibilities and duties are distributed to expert individuals, which in turn allow its members to gain insights from other employees. These ideas on the other hand are turned into effective and appropriate policies and company systems. Initially, Kmart also practiced discrimination among minorities in terms of business leadership. As indicated by literature, this issue has been highly evident in various businesses and organizations. As researches have indicated the unfairness of this act, businesses have started to become more open for minorities as leaders. Likewise, Kmart places great priority to minorities in their workforce by providing them with appropriate leadership trainings.
In theory, innovation has been recognized as a significant business attribute particularly in generating positive and significant outcomes. This has been greatly applied by Kmart by means of implementing various policies, programs and technologies, which had not only benefited the business itself, but also the customers as well. With innovation, the development of Kmart has been rapid, particularly through increased market coverage and customer satisfaction. Though some innovations of the business may not be effective at first, Kmart was able to overcome these problems by making the most of its strengths.
Motivation is also an important attribute for the initial development of a business. Businesses used to relate motivation solely on financial rewards. Eventually, the significance of intangible forms of motivation has also been recognized. In Kmart both of these motivational factors are applied. Employees are given due rewards through benefits as a form of recognition for their exemplary performance which in turn makes them feel significant for attaining company success.
Though the development of a business may be bombarded by a number of challenges, there are certain attributes that can help in overcoming them. In the case of Kmart, the owners of the business had also encountered several problems and competition. However, with the integration of various business attributes, Kmart was able to compete as retail industry. From this analysis, it becomes clear that the role of the entrepreneurs is not only for the purpose of gaining profits. They also have an important leadership role that requires them to create policies and systems that will benefit all other parties involved. In addition, entrepreneurs are also significant in creating positive social relations with their customers and employees. , as Kmart’s founder, was able to integrate valuable work practices and business trends within its operation, which later became part of what the business has been known for. Eventually, these policies and practices were followed and applied by other industries as well.
Recommendation
Based on the conclusion and analysis above, the researcher came up with the following recommendations:
The company should deeply consider the potential of the Internet to their business. Although they are generally focused on retail, the use of the Internet will allow them to expand its sales as a supplier of wholesale merchandise. Moreover, in order to be consistently at the top of the industry, they should start buying out their small competitors. This way, they could save a great deal of anxiety whenever there are possible threats to their company. Similarly, they should also start lobbying for statues and laws that would protect their rights as corporations in Congress whenever a well-written law is enacted. This way, they could monitor what proposed bills could be beneficial and what could keep a tight rein on the company.
Reference
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